NVCA Today

10-Year Venture Returns Decline Significantly, as 1999 Activity Begins to Roll Out of the Calculation

Short term venture capital industry performance remained flat as public markets began to recover. In Q2 2009, the public equity markets staged a comeback as shown by the major indices. During that same period, few exits and the continued presence of the large number of later stage companies in venture portfolios kept net asset values (NAVs) and therefore venture returns flat.

Over the one year period from July 1, 2008 to June 30, 2009, the US venture industry saw a pooled -17.1% return — largely driven by lower portfolio NAVs. The public markets over the same period experienced a greater drop in value.

Going forward, we expect the 10-year statistics which now include some of the strong gains in the late 1990s to decline significantly as those periods roll out of the calculation period.

Over the long haul, the industry has returned much greater than 15% annualized internal rate of return (IRR) net to its investors on a pooled basis as reflected in the 20 year statistics. 

US Venture Capital Index Returns for the Periods ending 6/30/2009, 3/31/2009 and 6/30/2008

Vintage Year Return Ratios

At the request of the NVCA board Research Committee, we began reporting cash ratios with the second quarter 2009 benchmark release. In future periods, expect to see more formal benchmarking using these widely-used ratios. The following chart illustrates the ratio of the dollars contributed to venture capital funds by limited partners and the dollars distributed back to them by vintage year. The chart also incorporates the NAV of the portfolio at June 30, 2009, as a similar ratio. For example, the 1998 vintage year funds have already returned in cash 1.29 times the amount of contributions received from LPs. If you assume the current NAV of existing portfolio is eventually paid out, the ratio will increase to 1.45 times. However, it is important to note that the NAV is unrealized and will change as companies exit the portfolio, are revalued, or are written off. The 1995 vintage year funds have the most positive ratio, returning 5.98 times the cash contributed by LPs, a number which rises to 6.06 should those funds realize the value of what is currently in the portfolio. Later vintage years have yet to return significant cash to LPs as most funds do not begin return dollars until after year 5.

Vintage Year Return Ratio Chart (Selected Years - Refer to Published Report for All Years)

Cambridge Associates Partnership Provides More Comprehensive Benchmarking and Better Transparency

"NVCA created its new relationship with Cambridge Associates to provide all the stakeholders in the venture capital industry with the best possible benchmarks based on comprehensive databases and to responsibly provide greater transparency into overall industry economics," said John Jaggers of Sevin Rosen Funds and its Research Committee chairman. "The published reports provide an impartial and detailed look at industry performance from an investor's point of view. Going forward we will provide analysis both on an IRR and ratio basis."

Detailed Report Published On NVCA Website - More Comprehensive Report Available on NVCA Members-Only Website

To view the full comprehensive report, which includes tables on additional time horizons, vintage years and industry returns, please visit the NVCA (www.nvca.org) or Cambridge Associates websites (www.cambridgeassociates.com). The NVCA members-only website contains even more detailed vintage year information. NVCA members who have not obtained their user name and password should contact Terry Samm at This e-mail address is being protected from spambots. You need JavaScript enabled to view it of the NVCA membership staff.

Cambridge Associates derives its U.S. venture capital benchmarks from the financial information contained in its proprietary database of venture capital funds. As of June 30, 2009, the database is comprised of 1,281 venture funds formed from 1981 through 2009 representing committed capital of $255.8 billion. Cambridge provides the official performance benchmark of the NVCA.